Angola: Cabinda prices continue to rise in March
Angola’s Cabinda oil sold at USD 65.7 per barrel (pb) on average in March, which was up from February’s USD 62.5 pb. The increase marked a 5.1% month-on-month rise (February: +12.9% mom). Moreover, prices were up 98.3% year-on-year in March, as global activity continued to recover from the impact of the pandemic. However, the jump in annual terms was partly due to a low base effect as March 2020 was the first month in which many countries entered lockdown.
March’s average price marked a 14-month high as the demand outlook continued to improve amid the global rollout of Covid-19 vaccination programs, with the subsequent easing of restrictive measures boding well for road usage ahead. Turning to output, OPEC+ production rose in the month amid greater output in Iran, Iraq, Libya and Nigeria, offsetting falling production in Kuwait and Saudi Arabia. Angolan output, however, dropped to 1.16 million barrels per day (mbpd) in March from 1.18 mbpd in February.
This year, prices should average higher than last year as global activity picks up, stimulating demand for oil. However, uncertainty remains over the strength of the post-pandemic recovery amid questions regarding vaccine availability and effective rollouts. Turning to output, Angolan production is set to ease slightly this year compared to last year, owing to the effect of previous production cuts.
Gerrit van Rooyen, economist at Oxford Economics, commented:
“We project oil production to decline by 8.5% to 1.23 million bpd in 2021, despite Eni’s Agogo project coming online last year. Meanwhile, the benchmark Brent crude oil price is expected to average $61.7pb this year –up nearly 48% from 2020. The inflows of petrodollars will be a boost for government revenues, which will support government expenditure and non-oil economy growth.”